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Small-business loans up at BB&T, but that could change

Loan balance growth at BB&T Corp. is finally reaping the benefits of a supposed business-friendly administration, according to a top executive.

During a May 31 conference, President and COO Christopher Henson said the number of entrepreneurs making loans has increased since the first quarter of 2017. Henson said that could change if the Trump administration is unable to achieve tax and healthcare reform.

"April has been stronger than March," Henson said. "May has been stronger than April."

Henson said he is expecting GAAP growth in the second quarter to range from 1% to 3%, up from negative 0.9% in the first quarter.

"And if you pulled [the] optimizing portfolio out of that, we're really seeing core growth of 6% to 8% in the second quarter," he said. "So it really is having an impact."

He reiterated statements made by CEO Kelly King on the company's first-quarter earnings call, emphasizing the company's pride in its community banking division. During the call, King said he was optimistic lawmakers would "get their act together" to create policies that would lead to more confidence among the company's small-business clients.

"You have people who run these businesses [who] are the ones that put our new president and his administration in office. So they are very positive," he said. "They're taking on more risk and borrowing money to kind of make that purchase of equipment or building they've been sort of holding off for a long time."

Henson said since the financial crisis, the company has pulled back some of its authority rather than continuing to operate under a "decentralized format."

"It's about putting more loan authority approval, deposit authority approval, operational authority approval to take your client issues back with the regional president, and then with [the] idea to take care of it at the point of sale," he said. "It's really kind of [put] entrepreneurship back in the business, which is really kind of our DNA."

Henson said the company is continuing to run off a handful of its portfolios as it focuses on improving profitability.

He said he expects its mortgage portfolio to subside by the end of 2017, and prime auto by the end of 2018. The company is also mindful of its CRE portfolio, and has pulled back in hospitality as well as multifamily lending, he said.

Henson said the company is mostly "built out" and, theoretically, is rightsizing its footprint to reinvest in digital offerings. The company has said it will close roughly 100 branches. Henson said about 60% of those will close by mid-2017.

"But we have to continue our digital spend. It's the right thing for the long-term benefit of the franchise," he said.